New York Times Co. Case Solution

2. Evaluate the arguments behind MSIM's claim and the dilemma it raises for the family behind the New York Times.

One of the largest shareholders of having a stake of 5.6% in NYT the Morgan Stanley Investment Management (MSIM) managed by Hassan Elmasry. In a meeting with Securities and Exchange Commission, MSIM called for eliminating the dual class structure that did not favor the public. The statement pinpointed that that the dual class structure creates special privileges and responsibilities that the board and management of NYT have failed to fulfill. The dual class structure was designed to protect editorial independence and integrity of news franchise now promotes a lack of accountability.

In a statement the fund manager Elmasry said that The New York is a matchless news franchise and has an excellent potential in the long run. Although it is time now for the company’s board to combine Class A and Class B common stock into a single class of common stock which will provide equal rights, voting power and representation to all shareholders. It will also assure that the company’s holders can hold the board and management accountable for company’s performance. Declassifying the share structure will encourage a culture of accountability benefiting the shareholders including Class B shareholders improving financial and operational performance and closing the gap between market price and intrinsic value.

The dilemma is that Arthur Sulzberger Jr. is confused about his duty to his shareholders as chairman of NYT and his commitment to the Times publisher to maintain the superior quality of the journal for the readers and his responsibility to preserve the Times free of ulterior influence unselfishly devoted to public welfare.

3. How should the family behind the New York Times respond to the MSIMs proposal?

MSIM has proposed urging NYT to decide the dual-class structure based on a vote, to separate the jobs of chairman and the times publisher, requiring the chairman to be an independent director and to put a majority of independent directors on the board’s compensation committee. When MSIM was continuously pressing to the NYT times to the board hired a lawyer Martin Lipton to evaluate the company’s practices. Lipton said that the dual- class structures are often found in family-controlled media companies e.g.